Who knew--Natural gas production up and prices down?

NY Times:

American natural gas production is rising at a clip not seen in half a century, pushing down prices of the fuel and reversing conventional wisdom that domestic gas fields were in irreversible decline.

The new drilling boom uses advanced technology to release gas trapped in huge shale beds found throughout North America — gas long believed to be out of reach. Natural gas is the cleanest fossil fuel, releasing less of the emissions that cause global warming than coal or oil.

Rising production of natural gas has significant long-range implications for American consumers and businesses. A sustained increase in gas supplies over the next decade could slow the rise of utility bills, obviate the need to import gas and make energy-intensive industries more competitive.

While the recent production increase is indisputable, not everyone is convinced the additional supplies can last for decades. “The jury is still out how big shale is going to be,” said Robert Ineson, a natural gas analyst at Cambridge Energy Research Associates, a consulting firm.

Still, many people in the natural-gas industry believe a new era is at hand, and a rising chorus of Wall Street analysts and Congressional lawmakers supports that notion. Competition among companies for rights to the new gas has set off a frenzy of leasing and drilling.

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Senior Democrats in Congress are getting behind natural gas, portraying it as an alternative fuel for transportation that can serve as a stopgap until renewable sources of energy, like solar and wind power, become economical on a broad scale.

“You can have a transition with natural gas that is cheap, abundant and clean,” the House speaker, Nancy Pelosi of California, said Sunday on “Meet the Press” on NBC.

She also said that an investment she and her husband had made in a company that produces natural gas for use in automobiles, revealed last week by The Wall Street Journal, was not a conflict of interest because “I’m investing in something I believe in.”

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Domestic gas production was up 8.8 percent in the first five months of this year compared with the period a year earlier, a rate of increase last seen in 1959, during the great drilling boom that followed World War II.

Most of the gain is coming from shale, particularly the Barnett Shale region around Fort Worth, which has been under development for several years. The increase in gas production stands in sharp contrast to the trend in domestic oil production, which has been declining steadily since 1970 and dropped 21 percent in the last decade alone.

The Barnett region proved that, using new technology, shale gas could be extracted on a large scale. But lately, companies have set their sights on shale formations that could produce far more gas than the Barnett.

Testing to determine the productivity of fields has been completed on just a tiny fraction of the potential acreage. According to a new report by Navigant Consulting, paid for by a foundation allied with the gas industry, there could be as much as 842 trillion cubic feet of retrievable gas in shales around the country, enough to supply about 40 years’ worth of natural gas, at today’s consumption rate. But thousands of wells need to be drilled before the exact reserves will be known.

Domestic natural gas prices have already plunged 42 percent since early July, an even faster drop in price than oil or most other commodities, in part because the rapid supply growth has begun to influence the market. Price spikes remain possible, of course, but throughout the industry the shale discoveries are causing a shift in thinking about the long-term outlook.

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They left out Pelosi's gaffe saying that natural gas was not a fossil fuel. I don't know how they missed it since it was in the same show they quote from. You can find it in a post below. So what is the Democrat case against offshore production of natural gas? Trillions of cubic feet are said to be available in offshore reserve areas as well as in ANWR. There is no rational basis for not producing natural gas from those areas. It must be the fear that oil will also be found.

We know that increased production and the knowledge that more supply is in the pipe line will keep prices down, but the Democrats have been reluctant to accept the logic of the law of supply and demand when it comes to oil and gas production.

There have been some new gas discoveries in the Washington County area over that five years some of which are significant. I think they are in the Austin chalk formation. There is a lot of drilling activity still, and BTW, it has not diminished the attractiveness of the area. In fact wealthy Houston's are driving up the price of acreage around here without getting the mineral rights necessarily.